A US judge has ordered that News Corporation and its chairman, Rupert Murdoch, face trial on allegations the firm broke its promise to shareholders at the time of its move from Australia to the United States. Delaware Chancery Court chief judge William Chandler has dismissed three of the five charges in the suit filed by institutional shareholders from the US, the UK, the Netherlands and Australia.
Those charges were of fraud, negligent misrepresentation and breach of fiduciary duty. But Justice Chandler has ruled a trial must be held on two other charges alleging breach of contract and breach of promise. "Because I am required to draw each crucial inference in plaintiffs' favour ... I conclude that plaintiffs' breach of contract claim survives defendant's motion to dismiss," the judge wrote.
Michael O'Sullivan, the president of the Australian Council of Superannuation Investors, says the case relates to the company's poison pill provisions. "But what we said about them is they can have the effect of the premium for control of the company passing from the major shareholder to another major shareholder with everybody else missing out," he said. "We didn't want poison pills introduced and then maintained.
"The company becomes a fortress and shareholders get no chance of selling their shares or their interest to a potential takeover." Mr O'Sullivan says the company's initial use of the poison pill - to fend off a possible move by Liberty Media - is not of concern. Instead, it is the company's decision to extend the provision. "In August of this year, Mr Murdoch announced ... that they were going to renew it for two years," Mr O'Sullivan said. "They had their general meeting in October and they didn't put that to shareholders. "And that was our concern, that they'd promised that they would and they broke that promise."
http://www.abc.net.au/news/newsitems/200512/s1535852.htm
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